State Requests Extension for Cook County Medicaid Expansion Plan

March 27, 2013

The State of Illinois has asked the federal government to extend Cook County’s Medicaid expansion plan to ensure that recipients remain covered after the end of 2013.

In a letter on March 21, 2013, the Illinois Department of Healthcare and Family Services (HFS) told federal authorities that it still expects the State to pass legislation allowing Illinois to expand its entire Medicaid program beginning in January 2014. HFS stated that it was requesting an extension for the Cook County plan as a contingency, in case statewide Medicaid expansion is not implemented in a timely fashion.

As discussed here, the Centers for Medicare and Medicaid Services (CMS) of the U.S. Department of Health and Human Services approved Cook County’s plan in October 2012. The plan, known as CountyCare, allows the County’s public health system to sign up low-income adults for Medicaid before Medicaid expansion begins under the Affordable Care Act (ACA) in January 2014. CountyCare is currently authorized to continue until December 31, 2013.

The plan’s expiration date is significant because of an Illinois law that imposes a moratorium on expansion of Medicaid eligibility until January 25, 2015. The law specifically grants an exception for the County plan, but CountyCare participants could lose Medicaid coverage at the end of 2013 unless the General Assembly lifts the moratorium and allows the State to join the national Medicaid expansion in 2014.

On February 28, 2013, the Illinois Senate passed a bill to authorize the State to participate in the expansion. The measure was approved on a party line vote of 40 to 19, with only Democrats voting in favor. The Illinois House has yet to consider the proposed legislation, and House Speaker Michael Madigan has reportedly said that he is seeking bipartisan support for the bill.

The federal authorization for CountyCare requires that any request for an extension be made at least six months before the scheduled expiration date. In the letter to CMS, HFS Director Julie Hamos wrote that the agency was requesting an extension until Illinois implemented the ACA expansion. Director Hamos stated that HFS was confident that the General Assembly would pass the necessary legislation, but “prudence requires that an extension be approved as a contingency.”

Medicaid expansion is one of the key provisions of the ACA designed to reduce the number of people without health insurance. Medicaid is a joint federal-state program that finances healthcare for specific categories of low-income people, including children, pregnant women, parents, the elderly and the disabled. Non-senior, non-disabled adults without dependent children have generally not been eligible for Medicaid.

The ACA extends Medicaid coverage to all adult citizens with annual incomes up to 133% of the federal poverty level (effectively 138%, or $15,415 for an individual in 2013, because 5% of income is disregarded in determining eligibility). The federal government is scheduled to pay 100% of the cost for the newly eligible population for the first three years of the program; 95% in 2017; 94% in 2018; 93% in 2019; and 90% thereafter.

The Medicaid expansion was made optional for states by a U.S. Supreme Court opinion in June 2012. The Supreme Court generally upheld the ACA but ruled that the federal government could not withhold matching funds for states’ existing Medicaid programs if they chose not to participate in the ACA expansion.

The Illinois moratorium does not apply to Medicaid expansions required as a federal condition of state participation in the Medicaid program. Because participation in the ACA expansion is optional, however, the moratorium must be lifted to allow Illinois to participate in 2014.

Critics of the proposed expansion are concerned that the federal government might reduce scheduled Medicaid reimbursement rates due to its own budgetary problems. To ease those concerns, the proposed legislation in Illinois ends coverage for the newly eligible population if the federal reimbursement rate drops below 90%. Opponents have also suggested that federal funds could be used to buy private insurance for low-income residents, rather than Medicaid.

CountyCare is a critical component of Cook County’s budget. The plan is budgeted to generate $99 million in net revenue for the Cook County Health and Hospitals System in the fiscal year ending on November 30, 2013, largely by providing Medicaid coverage for patients who are currently uninsured and do not pay for their medical services.

States typically pay for Medicaid expenses and are then reimbursed by the federal government; the reimbursement rate for Illinois is 50%. In the case of Cook County, the non-federal share of Medicaid spending is paid by the County, rather than by the State. If Illinois participates in the ACA expansion beginning in 2014, the County’s costs for newly eligible patients could be completely covered by the federal government through 2016.